What is screening?
Screening is the process of gathering information about a potential tenant, housemate or flatmate in order to be able to form a decision as to whether to let to him or her.
As a landlord, you must keep in mind that screening does not guarantee that problems won’t occur. However, it can reduce the probability that they do.
Why tenant background checks are recommended
Ending a tenancy requires that the landlord gives sufficient notice, usually of several months. Bad tenants may not co-operate, and it may take longer to evict them. As a result, its better to take the time to find good tenants than to let your property quickly to the first applicants expecting to be able to remove them quickly if they breach the tenancy agreement.
If you are letting under a licence agreement, for example, if you are finding a flatmate, it is much easier to end the agreement and to have him or her move out fast. However, in these situations, you need to consider that the person is living in your home, and therefore has access to your possessions and can affect your personal life.
Screening is imperfect because there is only so much information you can gain about a prospective tenant in advance. The key is to gather enough information to be satisfied that on balance, the tenant is likely to treat the property well and pay the rent on time
Proof of identity
We recommend that you ask for a passport and some other form of reliable photo identification.
A driving licence is a good second form of ID as it not only has a photograph, but also a previous address and a signature. The signature and the photo can be compared to those on a passport or other identification documents, while the address should match that used on bank statements or utility bills.
Non-photographic ID can also be useful, provided it is recently produced. You should bear in mind that bank statements and utility bills can be created or doctored fairly easily using commonly available software, so these should not be relied on alone.
Right to rent
Landlords are legally required to check the immigration status of any adult before renting a property.
The landlord must be provided with a copy of the passport and documentation to show that the prospective tenant has a right to live in the UK for the duration of the tenancy.
Financial checks
The most common problem when letting property is that the tenant does not pay the rent in full or on time.
You should ask for bank statements. Of course, most banks now produce soft copy statements only. You should be wary of accepting a print-out or a screen print. These can be doctored.
You should ask your prospective tenant to ask their bank for official paper copies of at least the last three months of transactions. There may be a cost to the prospective tenant for this, but he or she will need these in any case to prove the same information to any other landlord. It should be seen as a cost of renting.
From the bank statements, you should be able to confirm:
that the person’s income matches other documents
that there is sufficient cash flow each month to meet the rent comfortably (i.e. that the person isn’t building up an overdraft where the rent might be payment that fails to be made)
that previous rent payments (if any) were made at roughly the same time each month (i.e. that rent was not paid erratically or late)
If the person is employed, then you should ask for the last three payslips and check that the amount received on these matches the bank account. An employment contract may be useful, but if the person has been employed for some time, then his or her salary may be larger now than stated in the contract. The money received may also not tie exactly to the contract either as tax and payment for other benefits may reduce the net amount received.
If the person is self-employed, then you should ask for evidence of sufficient on-going work to be able to pay the rent. You may want to see that there are savings from which rent could be paid if work was not forthcoming.
You can also carry out a credit check. These can be done online inexpensively. It is best to ask the tenant to use a specific service and to provide the report to you. Credit reference agencies usually do not provide personal information about someone without having obtained their prior permission to give it.
References
References can be from various sources.
An employer might confirm that the employee has been in employment for a period of time and his or her current salary.
A previous landlord might confirm the dates between which the person rented from him or her, whether there was any damage to the property and whether the rent was paid on time and in full.
A friend might give a personal reference. Some landlord ask for the friend to have a professional qualification (such as being a lawyer or a doctor) and/or to have known the person for a certain period of time.
There are many issues with references.
A personal reference from a friend is likely to be positive and not objective. It will hold little value.
A previous landlord is under no obligation to give a reference, and therefore it might be difficult to persuade him or her to give one. The previous landlord may be prevented from disclosing certain information without the agreement of the prospective tenant.
An employer will also be reluctant to give much information if any. Employers have their own businesses to run and spending time writing to every prospective landlord isn’t something that adds to the bottom line.
Data protection may be cited as a reason not to give a reference. The acronym “GDPR” is likely to be included. However, the Data Protection Act 2018 (which incorporates the GDPR Directive) allows a third party to give personal information if the subject (the prospective tenant) agrees to it. So a refusal to give a reference on the basis of privacy is simply an excuse. You could ask the prospective tenant to ask directly (therefore overcoming the issue of providing personal information to a third party) or ask for a reference from someone else.
Criminal record checks
Criminal background record checks are usually performed by credit reference agencies. A Disclosure and Barring Service (DBS) check can also be done through the Gov.UK website.
You should ask your prospective tenant to provide the results of this check for you.
Screening a guarantor
A guarantor is someone who agrees to pay the rent or cover damage to the property if the tenant fails to pay for it.
Bringing in someone else reduces your risk that the tenant doesn’t pay you, as it gives you the opportunity to seek the amount due from the guarantor instead.
However, you also need to make sure that the guarantor can pay you – otherwise, the advantage of using one is lost.
The same background checks as for tenants do not need to be conducted for the guarantor. Usually, identity checks and some proof of having assets or income that could be used to pay outstanding rent should be sufficient.
Summary
Screening potential tenants thoroughly reduces the risk of problems later on down the line relating to the tenant not paying the rent or otherwise breaching the terms of the tenancy.
You want to make sure:
- the tenant is who he or she says she is
- you’re confident that he or she can pay the rent during the tenancy
- that he or she is of good character
Lastly, remember that a good tenant will be aware of the need to screen and will be happy to provide the information you need. Someone with something to hide may be less forthcoming.